So far, the sound of a washing machine or a Drake song has earned a creator the same amount of money per listen on the streaming platform. But this model will soon be fixed by French streaming service Deezer. He signed a deal with Universal Music Group, the largest record company in the world. The streaming service and record label reported Wednesday that the new payment model should ensure that professional artists earn more money from their music.
The way music revenues are distributed on the streaming service will completely change from October this year. Initially, the changes only apply to the French market, where around 40 percent of the total 9.3 million subscribers live. The company wants to expand to other markets next year. This is the first time since Spotify was founded in 2008 that the music streaming business model has changed in this way.
Until now, the payment model has been as follows: artists, professional (according to Deezer with more than a thousand streams per month) or non-professional, put their music on the streaming service. Every listen longer than thirty seconds earns money; About $0.005. The total proceeds from the number of listens are then divided equally between all “artists”. It doesn’t matter who created the song, or how the listener ended up on the song (through actively searching for it or by chance via an algorithm) for payment.
This model has proven attractive to fraudsters. They place audio files – often not music – on the music service that only last longer than thirty seconds, which is the minimum listening time to generate revenue. They then let the bots (not the real listeners) listen to them and make money from them.
Since the total revenue is split evenly between music songs and these types of podcasts, less money is left in the pot for the “real” artists. Files such as the sounds of washing machines or rain generated an estimated $9 million last year, analysts from US investment bank Goldman Sachs wrote in a report published in July.
In the new model, artists with more than a thousand streams from five hundred unique listeners are counted double. Songs that listeners actively search for, rather than finding through an algorithm, also get double pay. Soon the sound of the washing machine and the rain will not contribute to increased revenue at all (about 2 percent of the total number of listeners on Deezer).
“We’re removing incentives for people to upload crap that has no value to actual listeners,” says Jeronimo Folguera, CEO of Deezer. Currently, according to Folguera, there is a lot of “noise” on the platform, such as “the sound of the washing machine and the rain.” The new model aims to help artists who “want to make a living from their music.” He believes it is “fundamentally wrong that thirty seconds of a washing machine recording should be paid the same amount as Harry Styles’ latest single.”
The question is whether other major streaming services, such as Spotify and Apple Music, will follow Deezer’s model. “The labels will have to take the lead on this again,” says lawyer Björn Schipper, who specializes in music rights. “If they say they will remove their artists’ music from the streaming service if the old model continues in the app, there is a good chance they will move forward with more streaming services.” According to the British business newspaper the Financial Times, Universal Music Group is also in talks with other streaming services about a new model.
According to Schipper, Universal Music Group has used its strong market position well to change the payment model. The record label represents world-famous artists such as Taylor Swift, Billie Eilish, Ariana Grande, The Rolling Stones, and Drake. “The hype on the line that currently still exists in grading streaming music and paying artists based on it will soon disappear. Artists with over a thousand streams a month are getting paid more from streaming services. This is to be welcomed.”
But, says Schipper, the biggest problem lies with the record companies themselves. “Even though artists can now make more money from streaming services, the majority still goes to the label. Today, some labels collect 80 percent and only 20 percent goes to the artist. Universal can also be a good example of “In distributing money more equitably. Therein lies the real nut that needs to be cracked.”
A version of this article also appeared in the September 7, 2023 newspaper.
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